everal years following creation of Bitcoin, the world’s first digital currency, the crypto industry has shifted from its rowdy past to become a more organized ecosystem meant to usher in a new era of global finance.
Following years of dialogue multi-disciplinary negotiations, the General Data Protection Regulation (GDPR) came at a time when the European Union community needed to take charge on matters relating to privacy.
Since its adoption, we can predict the effects of GDPR on people, economies and crypto-related law making processes.
The Issue of Government Surveillance
From the law enforcement standpoint, the prevalence of crypto-enabled dark web crime has given rise to the need for state-controlled mechanisms to tackle the problem.
The aspect can be observed through the lens of financial transparency where stakeholders have had to actively monitor the application of cryptocurrencies.
The government-enabled ability for financial institutions to understand the origins and destinations of crypto transactions is what has led to partnerships involving blockchain analytics firms – which have become central to anti-crypto crime activities across the economic divide.
For instance, the recent Twitter hack was followed by reports that the U.S. Federal Bureau of Investigation (FBI) contacted blockchain intelligence firms to assist in the tracing and identification of the online Bitcoin scam’s perpetrators.
Apart from the Twitter example, the other government-private sector partnerships in the blockchain analytics space highlight the present and future of government surveillance on cryptocurrency transactions – indicating an end to private transactions.
Indeed, the unstoppable future of digital assets adoption will usher in an era of vast transactional data generation as stakeholders will succeed to access a wide range of information about how people transact in virtual currencies.
Importantly, at the same time, the exponential growth in sophistication of blockchain analytics technology and compliance mechanisms will mean that surveillance and law enforcement agencies will require a decreasing amount of information to expose identities in crypto transactions.
The wealth of blockchain data will be at the disposal of government bodies, and it is obvious that data protection regulation will not be bone of contention (specifically the GDPR). The expectation that individual financial data privacy will completely cease to exist is bound to shape up into a new reality.
Therefore, privacy law will become particularly important in ensuring a balanced financial sector that accommodates the inevitable force that is the crypto.
The Blessing of Privacy Regulation
Arguably, the common sentiment among crypto users and enthusiasts has a negative connotation to the subject of regulator involvement in blockchain progression – most people decry the excessive interference of the crypto industry by government agencies.
While some of the concerns may be valid, there is no denying that legislation will ensure that crypto adoption take place with the best interests of users in mind.
Privacy law will serve the purpose of a “no man’s land” where crypto users and regulatory agencies will find a common understanding as far as the issue of government surveillance is concerned.
The GDPR, for example, has effected a wide range of improvements to the crypto industry’s most definitive days, as it went a long way to fight the problem of questionable data harvesting and handling by both government and private sector actors.
It may be hard to believe, but GDPR has created massive changes to cultivate a privacy culture among societies with people that were initially ignorant of their anonymity and its fundamental importance.
Further, regulatory outfits and cryptocurrency users share the goal of ensuring that crypto assets are used for noble reasons as envisioned by creators of the various cryptocurrencies in existence – this aspect may turn out to the last building stone that’s needed to allow full exploitation of the crypto’s potential.